Automobiles India is echoed on the back of fast growing economy and lower insight, the global automobile manufacturers and exporters are foreseeing humungous opportunities in India. Every other global original equipment manufacturer is boasting of significant India plans. Local too are aggressive in comprehending the opportunities and have chalked out expansion plans to encase the domestic opportunity. India low cost advantage would drive automobile exports as well. Buoyancy in the automobile industry would translate into healthy growth for the ancillary auto component industry as well in the next 4 5 years. The low cost advantage would also drive component exports from India.
The Chance on demand side would come along with various challenges on profitability side. Improving intensity of competition amongst the automobile manufacturers and exporters would not allow full pass-through of the rising input costs. The pressure of competition would be percolated down to the fragmented auto parts industry with weak bargaining power. The automobile manufacturers find it difficult to pass on the rising costs to the cost-sensitive replacement market. Thus opportunities on volume front could easily be overshadowed with the margin pressure. The top-line growth may not fully percolate down to the bottom-line. Thus, the players need to be innovative in reducing their costs and improving their productivity to maximize the profitability.
